This research will examine the factors associated with the decision of elderly individuals to obtain privately-financed insurance for long-term care. The proposed research will examine the relative contribution of assets, income, and characteristics of the Medicaid program, and, in addition, will examine the role of a factor that has received little attention in previous empirical studies of long-term care insurance, that of the family. Existing studies have shown that adult children act as major providers of informal long-term care in many families, and some evidence also exists that these caregivers sometimes act as substitutes for formal long-term care. Exploring the substitution between privately-financed long-term care insurance and potential providers of informal long-term care in the form of adult children will yield answers to the following questions: (1) to what degree can the traditional explanations for the lack of long-term care insurance explain the decision to purchase coverage for long-term care in a sample of elderly individuals; (2) to what degree do factors such as the sex composition of children in the family and family size affect long-term care insurance coverage; and (3) which characteristics of state Medicaid programs influence long-term care insurance coverage. To test the role of these various factors, this study will employ multivariate analysis of long-term care insurance coverage using data from Wave I of the Study of Asset and Health Dynamics Among the Oldest Old (AHEAD). Because this research will attempt to define and clarify the potential market for private insurance by focusing on the relative contributions of traditional explanations and family factors, the proposed research can offer significant insight into policy questions such as the financing of long-term care.